By Soma Biswas

Endo International PLC became the latest pharmaceutical company to file for bankruptcy under the weight of lawsuits alleging it played a role in fueling the opioid crisis.

The drugmaker, domiciled in Ireland with operations in Malvern, Pa., filed for chapter 11 protection Tuesday in the U.S. Bankruptcy Court in New York after struggling with more than $8 billion in debt, competition from generic manufacturers and opioid litigation. Endo said that most of its first-lien creditors have agreed to buy the business out of bankruptcy, in return for $6 billion in debt forgiveness.

Endo has faced thousands of lawsuits -- including hundreds from state and local governments -- over the marketing and sale of its painkiller Opana ER, which the company discontinued in 2017 at the request of the Food and Drug Administration.

Additionally, Endo has suffered a decline in revenue in recent quarters as a result of generic competition for a key drug, Vasostrict. Investors dumped the company's debt and stock in the spring amid a broad selloff from risk assets.

Endo President and Chief Executive Blaise Coleman said Tuesday that the chapter 11 filing addresses the company's debt and establishes a "pathway to closure" for opioid-related lawsuits that it has been defending "at an unsustainable cost."

The company has already reached settlements with a handful of state attorneys general, but still faces about 3,500 lawsuits from state and local governments, private healthcare providers and individuals, according to Endo's latest financials, released earlier this month.

Endo said Tuesday that its planned bankruptcy sale would establish trusts funded with $550 million over 10 years to benefit opioid plaintiffs. Other drugmakers including Purdue Pharma LP and Mallinckrodt PLC have filed for bankruptcy in recent years to weather opioid lawsuits. Chapter 11 gives corporate defendants powerful tools to settle litigation, including a halt on pending lawsuits and discovery proceedings.

Creditors holding most of Endo's debt have collateral rights over its assets and priority ranking over opioid plaintiffs in a bankruptcy. Endo said its secured creditors have consented to the use of cash collateral to fund the business during the restructuring process.

Write to Soma Biswas at soma.biswas@wsj.com

$(END)$ Dow Jones Newswires

August 17, 2022 05:57 ET (09:57 GMT)

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